Hindsight
First came the recession. Now come the books about the roots of the recession.
This Time is Different
By Carmen M. Reinhart and Kenneth S. Rogoff
Princeton University Press, 463 pp., $35
Financial crises are hard to predict, but once one occurs, it's easy to guess what happens next: Housing prices plummet, unemployment rises, the economy shrinks -- and bookstores get hit with a tsunami of new volumes about the mess.
The Great Recession took most of us by surprise, yet as Carmen M. Reinhart and Kenneth S. Rogoff point out in their important new book, This Time Is Different: Eight Centuries of Financial Folly, red flags were popping up all over. They included soaring asset prices, absurd debt levels, huge trade deficits and slowing economic growth -- "virtually all the signs of a country on the verge of a financial crisis."
Unlike prior narrative accounts of market panics from such finance writers as Charles Kindleberger and Edward Chancellor, Reinhart and Rogoff give us a data-driven study that is global in sweep but also a model of clarity. The authors package their notably nonhysterical analysis of the latest crisis in a large, self-contained section of the book, inviting harried readers to skip right ahead to it.
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